Designed to provide broad exposure to the Financials - Brokers/ Capital markets segment of the equity market, the iShares U.S. BrokerDealers & Securities Exchanges ETF (IAI) is a passively managed exchange traded fund launched on 05/01/2006.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Brokers/ Capital markets is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.
The fund is sponsored by Blackrock. It has amassed assets over $203.79 million, making it one of the average sized ETFs attempting to match the performance of the Financials - Brokers/ Capital markets segment of the equity market. IAI seeks to match the performance of the Dow Jones U.S. Select Investment Services Index before fees and expenses.
The Dow Jones U.S. Select Investment Services Index measures the performance of the investment services sector of the U.S. equity market.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.42%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.42%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.
Looking at individual holdings, Morgan Stanley (MS) accounts for about 20.12% of total assets, followed by Goldman Sachs Group Inc (GS) and Cme Group Inc Class A (CME).
The top 10 holdings account for about 83.14% of total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. BrokerDealers & Securities Exchanges ETF return is roughly 9.55% so far, and was up about 24.70% over the last 12 months (as of 01/14/2021). IAI has traded between $43.05 and $87.30 in this past 52-week period.
The ETF has a beta of 1.14 and standard deviation of 28% for the trailing three-year period, making it a high risk choice in the space. With about 27 holdings, it has more concentrated exposure than peers.
IShares U.S. BrokerDealers & Securities Exchanges ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IAI is a reasonable option for those seeking exposure to the Financials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
SPDR S&P Capital Markets ETF (KCE) tracks S&P Capital Markets Select Industry Index. The fund has $53.76 million in assets. KCE has an expense ratio of 0.35%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares U.S. BrokerDealers & Securities Exchanges ETF (IAI): ETF Research Reports
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
Morgan Stanley (MS) : Free Stock Analysis Report
CME Group Inc. (CME) : Free Stock Analysis Report
SPDR S&P Capital Markets ETF (KCE): ETF Research Reports
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